1. Comparability
Users must be able to:
compare the financial statements of an entity over time to identify
trends in its financial position and performance
compare the financial statements of different entities to evaluate
their relative financial performance and financial position.
For this to be the case there must be:
consistency and
disclosure.
2. Verifiability
‘
Verification can be direct or indirect. Direct verification means
verifying an amount or other representation through direct
observation, for example, by counting cash. Indirect verification
means checking the inputs to a model, formula or other technique
and recalculating the outputs using the same methodology'
e.g.
recalculating inventory amounts using the same cost flow assumption
such as first-in, first-out method
3. Timeliness
'Timeliness means having information available to decision makers
in time to be capable of influencing their decisions. Generally, the
older the information is the less useful it is’
4. Understandability
Understandability depends on:
the way in which information is presented
the capabilities of users.
It is assumed that users:
‘have a reasonable knowledge of business and economic
activities’
‘review and analyse the information diligently
